Bank on a stress-free move to an account that pays you interest
ONE in three bank customers has never changed their current account, put off by the thought that it would be a lot of hassle without much gain.
But with a number of accounts paying interest on credit balances, and with switching made easier as a result of new rules, there is nothing to hold you back.
Tesco Bank, for example, has just confirmed it will pay a minimum 3 per cent on current account balances of up to £3,000 for two years beginning this April.
David Crawford, head of current accounts at NatWest, says that with interest rates so low, current accounts that pay cashback on household bills are proving popular. The Santander 123 account and NatWest’s Reward Current Account are among those which pay cashback on spending.
But be aware that both levy a monthly fee – £5 with Santander and £3 in the case of NatWest.
Crawford says that despite the monthly charge most consumers still make an overall gain.
He explains: ‘On average our customers earn £120 per year in rewards. If a NatWest customer has the average account balance of £1,000 they would need to receive an interest rate equivalent to 8.4 per cent to match that.’
Account holders who rely on an overdraft should not be scared of switching either. Financial product scrutineer Moneyfacts puts First Direct, M&S Bank and the Post Office among the cheapest authorised providers of overdrafts.
Switching bank account is easier than you may think. Since 2013 the Current Account Switching Service, introduced by banks and the Government, has ensured that the process should take no longer than seven working days.
It is backed by a guarantee which states that, if there is a problem with direct debits or payments, your new bank will cover any costs or charges. The service also redirects payments that accidentally go into your old account for up to three years.
To find out more visit currentaccountswitch.co.uk.
TOP TIPS
DO NOT be lured in by a cash bonus. Check out the best current account providers for complaints handling and customer service by visiting the website Fairer Finance.
IF OPTING for an interest-paying current account, check that you understand all the terms and conditions. Many require minimum monthly deposits. In several cases the interest rate promised includes a short-term bonus, which disappears after a year or so.